The WACC of Zardoya Otis SA (ZOT.MC) is 11.0%.
| Range | Selected | |
| Cost of equity | 9.90% - 12.30% | 11.10% |
| Tax rate | 23.70% - 23.80% | 23.75% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 9.9% - 12.2% | 11.0% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 6.3% | 7.3% |
| Adjusted beta | 1.13 | 1.16 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.90% | 12.30% |
| Tax rate | 23.70% | 23.80% |
| Debt/Equity ratio | 0.01 | 0.01 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 9.9% | 12.2% |
| Selected WACC | 11.0% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for ZOT.MC:
cost_of_equity (11.10%) = risk_free_rate (3.05%) + equity_risk_premium (6.80%) * adjusted_beta (1.13) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.